Crisis destabilizes markets, creating both the existential risk of survival and unexpected spikes in demand. Family businesses have special needs when it comes to crisis management because there is more at stake than anonymous shareholders; the family’s narrative and core values also need to be considered. Authors at the Harvard Business Review have discovered one striking similarity among multi-generational institutions that effectively manage crisis: governance as an essential service.

According to HBR, governance means adapting the oversight of an enterprise so that family owners, board members and executives all remain aligned on key issues such as long-term vision, core values and risk management processes. Communication and coordination are always important, but they become essential under conditions of extreme uncertainty. Concretely, this means that chairs and chiefs need to increase frequency of contact and scope of coordination. A “nose in, fingers out” approach can be effective, creating cooperation among leaders while leaving them the freedom to make their own decisions.

Family businesses may emerge from crisis with fundamental changes in structure. A common narrative supports organizational resilience through wide-reaching change and helps key stakeholders contextualize strategic decisions. The business may change significantly, but core values remain intact. Multigenerational families should review their options for involving the next generation in managing the business in order to lay good foundations for coping with unexpected transitions amidst crisis.

ACTIVE GOVERNANCE IS KEY – Family businesses adapting to crisis